Gift Certificate: How would you handle it?

[swirt]

As a customer, I find expiration dates on gift certificates annoying. You get a GC at Christmas, you put it away somewhere, forget about it for a while, life gets busy, etc. And then eventually you remember it and pull it out, and it's expired, and now you feel bad because you wasted your friend's money.
From a business point of view, what's your concern with honoring an expired gift certificate (honest question, not rhetorical)? Is it just that it complicates your accounting, or messes up your cash flow forecasts? My gut instinct on these issues is to be very generous with customers - I believe a happy customer is better in the long run, even if I feel like a doormat for a while. In my field (software) I'm just hoping for positive word-of-mouth; in a B&B setting I would imagine there's an even greater effect, since you have the possibility of repeat guests. Maybe some guests are more hassle than they're worth - that's a personal judgment call, I guess..

There are a few reasons that come to mind from personal experience:

• Limited supply - Unlike software sales (where you can sell an unlimited supply) our rooms are a limited commodity. In our case we are small and seasonal so our available room nights are extremely limited At the peak of our gift certificate sales, we had more than half a season's worth of gift certificates sold. if those all came in within a year's span, we'd be in trouble. With a realization like that the choice is to keep selling paper, stop selling them, or have a way to take them out of retire/expire them from service.
• Limited Future - Many innkeepers are in a position where they are doing this as their final job as they slide into retirement. Others reach a point where they know they want out within a few years. Others have health or family issues that cause them to reconsider on a yearly basis whether they will continue the B&B. Having large, unshrinking collection of gift certificates that would have to be refunded if you close the business can be a bit unnerving. Ideally the gift cert revenue should sit in a separate account so giving it back would be no hardship, but the reality is that many innkeepers use gift certificate revenue to make it through the off-season.

 

[YellowSocks]

As a customer, I find expiration dates on gift certificates annoying. You get a GC at Christmas, you put it away somewhere, forget about it for a while, life gets busy, etc. And then eventually you remember it and pull it out, and it's expired, and now you feel bad because you wasted your friend's money.
From a business point of view, what's your concern with honoring an expired gift certificate (honest question, not rhetorical)? Is it just that it complicates your accounting, or messes up your cash flow forecasts? My gut instinct on these issues is to be very generous with customers - I believe a happy customer is better in the long run, even if I feel like a doormat for a while. In my field (software) I'm just hoping for positive word-of-mouth; in a B&B setting I would imagine there's an even greater effect, since you have the possibility of repeat guests. Maybe some guests are more hassle than they're worth - that's a personal judgment call, I guess..

As a customer, I find expiration dates on gift certificates annoying. You get a GC at Christmas, you put it away somewhere, forget about it for a while, life gets busy, etc. And then eventually you remember it and pull it out, and it's expired, and now you feel bad because you wasted your friend's money.

I have to agree, at least on the life gets busy part. I bought a soap pump from Wal-Mart. Before I ever got it out of the bag I found a better one somewhere else... figured I could take the WM one back, no problem. Well, I finally cleaned out our bedroom last week (after dh had a mishap trying to get to his side of the bed), found the dispenser, and set it aside to take back. Took it in yesterday... they have a 90 day policy, and I bought it July 17th. Argghh! I pleaded and a supervisor allowed me to return it. I mean, if I didn't have the receipt, they'd have taken it, right?
I'm a big one for finding receipts and gift cards and things months (years, decades) later and hate those expiration dates!
However, I agree with Swirt, too...
=)
Kk.

 

[IronGate]

As a customer, I find expiration dates on gift certificates annoying. You get a GC at Christmas, you put it away somewhere, forget about it for a while, life gets busy, etc. And then eventually you remember it and pull it out, and it's expired, and now you feel bad because you wasted your friend's money.
From a business point of view, what's your concern with honoring an expired gift certificate (honest question, not rhetorical)? Is it just that it complicates your accounting, or messes up your cash flow forecasts? My gut instinct on these issues is to be very generous with customers - I believe a happy customer is better in the long run, even if I feel like a doormat for a while. In my field (software) I'm just hoping for positive word-of-mouth; in a B&B setting I would imagine there's an even greater effect, since you have the possibility of repeat guests. Maybe some guests are more hassle than they're worth - that's a personal judgment call, I guess..

. . . From a business point of view, what's your concern with honoring an expired gift certificate (honest question, not rhetorical)? Is it just that it complicates your accounting, or messes up your cash flow forecasts? . . .

Unredeemed gift certificates show up on your balance sheet as a liability. A large outstanding gift certificate balance could make it difficult to obtain financing, especially where cash flow is a concern. That's where the expiration date came from in the first place; over time (and with enough volume), it can become pretty easy to determine how many of your outstanding gift certificates will not ever be redeemed, so it made sense to simply have a method in place for wiping them out.
Some gift certificates are written not for a dollar amount, but for the completion of a service. The giver wants to make sure that Mom and Dad don't have to spend a dime of their own money, so they buy a certificate good for "three nights, including all costs." Unfortunately, if Mom and Dad don't use it years, the cost to the business for providing that service will almost certainly have risen, and possibly by a huge amount, so it really hurts the innkeeper when it is finally redeemed.

 

[gillumhouse]

As a customer, I find expiration dates on gift certificates annoying. You get a GC at Christmas, you put it away somewhere, forget about it for a while, life gets busy, etc. And then eventually you remember it and pull it out, and it's expired, and now you feel bad because you wasted your friend's money.
From a business point of view, what's your concern with honoring an expired gift certificate (honest question, not rhetorical)? Is it just that it complicates your accounting, or messes up your cash flow forecasts? My gut instinct on these issues is to be very generous with customers - I believe a happy customer is better in the long run, even if I feel like a doormat for a while. In my field (software) I'm just hoping for positive word-of-mouth; in a B&B setting I would imagine there's an even greater effect, since you have the possibility of repeat guests. Maybe some guests are more hassle than they're worth - that's a personal judgment call, I guess..

As a customer, I find expiration dates on gift certificates annoying. You get a GC at Christmas, you put it away somewhere, forget about it for a while, life gets busy, etc. And then eventually you remember it and pull it out, and it's expired, and now you feel bad because you wasted your friend's money.
Of course the customer is annoyed by the expiration date at a B & B. But have you ever looked at the GC from a store? What they do is charge x$ to that GC each month it is unused until it is now worthless. Go ahead and put it in a drawer and try to use it next year. Innkeepers are small businesses and John Q thinks small business is there to cater to his whims and if that means redeeming a one night that someone paid $75 for as a room with a shared bath and now that room has a private bath and the rate is now $150 (because the GC was purchased 5 years ago) too bad. The certificate says room for 1 night.
Sorry, as a business person how bad you feel for wasting your friend's money is not MY problem. Making a profit so I can stay in business is my problem. And while you were allowing the GC to languish away in that drawer, I may have decided to retire or as one innkeeper I know, decided that she had received the answer to her question about closing and retiring when lightning struck her house and it burned. Some B & Bs have sold as a residence. Is that homeowner now going to give you a room for the night?
Lots of reasons for having expiration dates. Dormant bank accounts and dormant gift certificates at teh big stores get the same treatment - last I heard it was -$2 per month until it reached $0.
Edited to say Welcome to the Forum

 

[Don Draper]

As a customer, I find expiration dates on gift certificates annoying. You get a GC at Christmas, you put it away somewhere, forget about it for a while, life gets busy, etc. And then eventually you remember it and pull it out, and it's expired, and now you feel bad because you wasted your friend's money.
From a business point of view, what's your concern with honoring an expired gift certificate (honest question, not rhetorical)? Is it just that it complicates your accounting, or messes up your cash flow forecasts? My gut instinct on these issues is to be very generous with customers - I believe a happy customer is better in the long run, even if I feel like a doormat for a while. In my field (software) I'm just hoping for positive word-of-mouth; in a B&B setting I would imagine there's an even greater effect, since you have the possibility of repeat guests. Maybe some guests are more hassle than they're worth - that's a personal judgment call, I guess..

As a business owner, I find customers who try to redeem expired gift certificates very annoying! They KNOW it is expired but figure they can find a way to press you into honoring it. I would never try to do that, I knew what the terms of any GC I purchased were before I bought it.
For us, our policy is right up front, anyone buying the GC KNOWS what the GC time frame is. It's simply not my problem that you shuffled it into a drawer and forgot about it for a year.
Major retailers have MANY more restriction on their GC's, many even deduct a percentage if you don't use them within 3 MONTHS of purchase. Our costs are always rising, so the GC starts to lose value immediately after we sell it.

 

[Jesse Smith]

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

 

[Morticia]

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

.

InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

Read on...actually, this forum is dedicated and devoted to those 2-3% of the B&B-going population who really and truly should never, ever leave home.

 

[Don Draper]

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

.

Keep Reading!

Unfortunately I do NOT find most people to be "pretty reasonable"...everyone is trying to get as much as they can. It's just human nature. And in this business it is so different from anything else...these are basically our homes and our very selves that we are selling...it just doesn't get any more personal than this...so we can start to feel like we are constantly under "attack".
I would have to do some hard calculating to be sure, but I do not think the majority of our gift certificate recipeients return...most come only because they got the GC and won't pay to come on their own. What I HAVE found is that the people who are PURCHASING the GC's are who are our return customers.

 

[JunieBJones (JBJ)]

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

.

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

Welcome Jesse!
If you sell your place then whatever GC's are outstanding you have to pay the new owners for these. If they are redeemed, then the new owners are now the ones paying for the rooms, which of course is not fair to them. So this is why I warn people to be careful when handing out freebies as donations. The BOGO is a better way to do it. They might think they won't ever be redeemed, but at the close of the B&B the new owner will be reimbursed for every last one.
If I give a freebie now I have a statement on there "Valid as long as JBJ owns this B&B" or similar statement.
I think we as innkeepers need to work with our guests, if a situation arises wherein they have to cancel or rebook a stay. If it is a blatent disregard for policies and self serving, that is usually pretty evident. So for that reason we have "same policies apply to GC as regular bookings" and other verbiage in place should we need it. No cash value blah blah blah
I had a group buy a GC for someone and then the someone called and wanted the cash for it. I said no, and then ended up extending it and they gave it to someone else who called to redeem it. The main reason they gave me was "he likes to smoke in bed. If he can't smoke in bed then we can't stay with you." The couple that redeemed it were lovely and it all worked out. But stressed me out in the meantime.

 

[Morticia]

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

.

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

Welcome Jesse!
If you sell your place then whatever GC's are outstanding you have to pay the new owners for these. If they are redeemed, then the new owners are now the ones paying for the rooms, which of course is not fair to them. So this is why I warn people to be careful when handing out freebies as donations. The BOGO is a better way to do it. They might think they won't ever be redeemed, but at the close of the B&B the new owner will be reimbursed for every last one.
If I give a freebie now I have a statement on there "Valid as long as JBJ owns this B&B" or similar statement.
I think we as innkeepers need to work with our guests, if a situation arises wherein they have to cancel or rebook a stay. If it is a blatent disregard for policies and self serving, that is usually pretty evident. So for that reason we have "same policies apply to GC as regular bookings" and other verbiage in place should we need it. No cash value blah blah blah
I had a group buy a GC for someone and then the someone called and wanted the cash for it. I said no, and then ended up extending it and they gave it to someone else who called to redeem it. The main reason they gave me was "he likes to smoke in bed. If he can't smoke in bed then we can't stay with you." The couple that redeemed it were lovely and it all worked out. But stressed me out in the meantime.
.

Ah, I understand better now where you're all coming from. I hadn't thought of retirement or otherwise shutting down the business, and I can see how having potentially permanent liabilities on the books could hurt. These are good reasons to have a published expiration date, even if you are generous about honoring expired certificates.
gillumhouse, thanks for the welcome! That store gift card policy is controversial and often unpopular, though - several states have made it illegal to automatically charge down a gift card. And some retailers (Starbucks comes to mind) make a selling point of the fact that they don't charge down your balance. I do agree with you that the customer's hurt feelings are not the innkeeper's problem. But if someone stays at a B&B and has a great experience, they might be inclined to return, and will probably tell their friends about their stay. But if they feel that the innkeeper was quibbling over something petty (in their own mind - right or wrong), they probably won't be coming back or recommending the B&B to others. I guess the tradeoff is whether the possibility of future revenue is worth the hassle!
InnsiderInfo, I can appreciate your annoyance, especially in this situation where the guests agreed to a 50% discount and then later wanted to negotiate a better deal. I'm assuming that these types of situations are very rare. Most people are generally pretty reasonable. Aren't they? Maybe I'm being naive...

Welcome Jesse!
If you sell your place then whatever GC's are outstanding you have to pay the new owners for these. If they are redeemed, then the new owners are now the ones paying for the rooms, which of course is not fair to them. So this is why I warn people to be careful when handing out freebies as donations. The BOGO is a better way to do it. They might think they won't ever be redeemed, but at the close of the B&B the new owner will be reimbursed for every last one.
If I give a freebie now I have a statement on there "Valid as long as JBJ owns this B&B" or similar statement.
I think we as innkeepers need to work with our guests, if a situation arises wherein they have to cancel or rebook a stay. If it is a blatent disregard for policies and self serving, that is usually pretty evident. So for that reason we have "same policies apply to GC as regular bookings" and other verbiage in place should we need it. No cash value blah blah blah
I had a group buy a GC for someone and then the someone called and wanted the cash for it. I said no, and then ended up extending it and they gave it to someone else who called to redeem it. The main reason they gave me was "he likes to smoke in bed. If he can't smoke in bed then we can't stay with you." The couple that redeemed it were lovely and it all worked out. But stressed me out in the meantime.

I wouldn't give money to the new owners for a donated GC. I would tell them they were out there (but those have expiry dates on them so I will stop giving them out when we get closer to selling). We got hit with one our first week here. Had no idea what it was all about. Called PO's, they laughed. Said, 'It's called 'good will'. You can choose not to take it if you want, but we're not paying you for it.'
Of course I worried how many more were out there. But that was the only one.
We had one person buy a GC and then call the next day to ask for his money back because his mother wouldn't stay at a B&B. He was mortified when he told me that. Apologized, etc. I hadn't mailed it out yet so I just refunded his card. When we get guests who want to get the money back, I tell them I can only refund the card that purchased the GC, do they want me to do that and they can get the money from their friends/parents/co workers?
There's no way they want to let their friends and family know that they are returning all the wedding gifts for cash. And I do state 'not reedemable for cash' on the GC, that doesn't slow everyone down, tho.